-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, iLx6DLczgSQO4MWhk8sUFqvhjG3kAwXk2e/JyppXCcSowpV4B/NvFsf+LDwKSO5Z AHFlnGEEtqhGolKccJRU7w== 0000950129-95-000485.txt : 19950516 0000950129-95-000485.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950129-95-000485 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: CSE SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: APACHE CORP CENTRAL INDEX KEY: 0000006769 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 410747868 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04300 FILM NUMBER: 95539366 BUSINESS ADDRESS: STREET 1: 2000 POST OAK BLVD STREET 2: ONE POST OAK CENTER STE 100 CITY: HOUSTON STATE: TX ZIP: 77056-4400 BUSINESS PHONE: 7132966000 MAIL ADDRESS: STREET 1: 2000 POST OAK BLVD STREET 2: STE 100 CITY: HOUSTON STATE: TX ZIP: 77056-4400 FORMER COMPANY: FORMER CONFORMED NAME: APACHE OIL CORP DATE OF NAME CHANGE: 19660830 10-Q 1 APACHE CORPORATION 10-Q DATED 03/31/95 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM --------------- TO --------------- COMMISSION FILE NUMBER 1-4300 APACHE CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 41-0747868 ---------------------------------- ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) SUITE 100, ONE POST OAK CENTRAL 2000 POST OAK BOULEVARD, HOUSTON, TX 77056-4400 --------------------------------------- --------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (713) 296-6000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO _____. Number of shares of Apache Corporation common stock, $1.25 par value, outstanding as of March 31, 1995.......................... 61,474,639 2 PART I -- FINANCIAL INFORMATION ITEM 1 -- FINANCIAL STATEMENTS APACHE CORPORATION AND SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) FOR THE THREE MONTHS ENDED MARCH 31, --------------------- 1995 1994 -------- -------- REVENUES: Oil and gas production revenues...................................... $134,372 $114,207 Gathering, processing and marketing revenues......................... 22,869 6,764 Equity in income of affiliates....................................... -- 95 Other revenues....................................................... 1,411 525 -------- -------- 158,652 121,591 -------- -------- OPERATING EXPENSES: Depreciation, depletion and amortization............................. 62,734 51,297 International impairments............................................ -- 3,500 Operating costs...................................................... 42,122 33,149 Gathering, processing and marketing costs............................ 21,461 5,583 Administrative, selling and other.................................... 9,052 8,555 Financing costs: Interest expense.................................................. 17,037 6,531 Amortization of deferred loan costs............................... 1,207 763 Capitalized interest.............................................. (3,282) (1,021) Interest income................................................... (681) (43) -------- -------- 149,650 108,314 -------- -------- INCOME BEFORE INCOME TAXES............................................. 9,002 13,277 Provision for income taxes........................................... 3,011 3,870 -------- -------- NET INCOME............................................................. $ 5,991 $ 9,407 ======== ======== NET INCOME PER COMMON SHARE............................................ $ .10 $ .15 ======== ======== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING............................. 61,445 61,164 ======== ========
The accompanying notes to consolidated financial statements are an integral part of this statement. 2 3 APACHE CORPORATION AND SUBSIDIARIES STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(IN THOUSANDS) FOR THE THREE MONTHS ENDED MARCH 31, -------------------- 1995 1994 --------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income............................................................ $ 5,991 $ 9,407 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization........................... 62,734 51,297 International impairments.......................................... -- 3,500 Amortization of deferred loan costs................................ 1,207 763 Provision for deferred income taxes................................ 3,011 5,370 Cash distributions less than earnings of affiliates................... -- (95) Gain on sale of stock held for investment............................. (350) -- Changes in operating assets and liabilities: Increase in receivables............................................ (6,095) (5,677) (Increase) decrease in advances to oil and gas ventures and other............................................................. (937) 598 (Increase) decrease in deferred charges and other.................. 593 (384) Decrease in payables............................................... (8,593) (2,051) Increase (decrease) in accrued operating costs..................... 5,596 (7,288) Decrease in advance from gas purchaser............................. (1,653) -- Increase in deferred credits and other noncurrent liabilities...... 2,199 974 --------- -------- Net cash provided by operating activities..................... 63,703 56,414 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Exploration and development expenditures.............................. (71,351) (68,661) Acquisition of oil and gas properties................................. (573,137) (4,489) Non-cash portion of net oil and gas property additions................ (9,932) (2,533) Purchase of AERC stock, net of cash acquired.......................... -- (13,885) Purchase of stock held for investment................................. (305) (1,000) Proceeds from sale of oil and gas properties.......................... 20,325 -- Proceeds from sale of investments..................................... 5,383 -- Prepaid acquisition cost.............................................. 25,377 -- Increase in inventory, net............................................ (3,550) (158) Other capital expenditures............................................ (1,751) (1,547) --------- -------- Net cash used in investing activities......................... (608,941) (92,273) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Long-term borrowings.................................................. 715,507 44,456 Payments on long-term debt............................................ (165,241) (5,260) Proceeds from issuance of common stock................................ 601 282 Payments to acquire treasury stock.................................... (1) 842 Costs of debt and equity transactions................................. (11,224) -- Dividends paid........................................................ (4,301) (4,268) --------- -------- Net cash provided by financing activities..................... 535,341 36,052 --------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS............................... (9,897) 193 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.......................... 15,063 17,064 --------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.............................. $ 5,166 $ 17,257 ========= ========
The accompanying notes to consolidated financial statements are an integral part of this statement. 3 4 APACHE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN THOUSANDS) MARCH 31, DECEMBER 31, 1995 1994 ----------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents....................................... $ 5,166 $ 15,063 Receivables..................................................... 107,896 101,801 Inventories..................................................... 12,418 8,868 Advances to oil and gas ventures and other...................... 10,102 9,165 ----------- ------------ 135,582 134,897 ----------- ------------ PROPERTY AND EQUIPMENT: Oil and gas, on the basis of full cost accounting: Proved properties............................................ 3,454,594 2,953,121 Unproved properties and properties under development, not being amortized............................................. 268,615 145,925 Gas gathering, transmission and processing facilities........... 25,809 25,809 Other........................................................... 48,843 47,121 ----------- ------------ 3,797,861 3,171,976 Less: Accumulated depreciation, depletion and amortization........ (1,549,107) (1,486,543) ----------- ------------ 2,248,754 1,685,433 ----------- ------------ OTHER ASSETS: Deferred charges and other...................................... 37,870 58,692 ----------- ------------ $ 2,422,206 $ 1,879,022 =========== ============
The accompanying notes to consolidated financial statements are an integral part of this statement. 4 5 APACHE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN THOUSANDS) MARCH 31, DECEMBER 31, 1995 1994 ----------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt.............................. $ -- $ 100 Accounts payable.................................................. 79,083 87,674 Accrued operating expense......................................... 18,437 14,772 Accrued interest.................................................. 9,612 3,211 Accrued exploration and development............................... 12,746 22,678 Accrued compensation and benefits................................. 4,151 10,384 Other accrued expenses............................................ 10,568 8,969 ---------- ----------- 134,597 147,788 ---------- ----------- LONG-TERM DEBT.................................................... 1,207,852 657,486 ---------- ----------- DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES: Income taxes...................................................... 160,566 156,180 Advance from gas purchaser........................................ 65,723 67,376 Other............................................................. 35,000 34,012 ---------- ----------- 261,289 257,568 ---------- ----------- SHAREHOLDERS' EQUITY: Common stock, $1.25 par, 215,000,000 shares authorized, 62,593,642 and 62,558,979 shares issued, respectively........................ 78,242 78,199 Paid-in capital................................................... 544,141 543,583 Retained earnings................................................. 209,538 207,850 Treasury stock, at cost, 1,119,003 and 1,118,975 shares, respectively...................................................... (13,453) (13,452) ---------- ---------- 818,468 816,180 ---------- ---------- $2,422,206 $1,879,022 ========== ==========
The accompanying notes to consolidated financial statements are an integral part of this statement. 5 6 APACHE CORPORATION AND SUBSIDIARIES STATEMENT OF RETAINED EARNINGS (UNAUDITED)
(IN THOUSANDS) FOR THE THREE MONTHS ENDED MARCH 31, --------------------- 1995 1994 -------- -------- Retained earnings, beginning of period................................. $207,850 $182,195 Net income............................................................. 5,991 9,407 Dividends declared: Common stock, $.07 per share......................................... (4,303) (4,286) -------- -------- Retained earnings, end of period....................................... $209,538 $187,316 ======== ========
The accompanying notes to consolidated financial statements are an integral part of this statement. 6 7 APACHE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods, on a basis consistent with the annual audited statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the summary of significant accounting policies and notes thereto included in the Company's latest annual report on Form 10-K. INCOME TAXES Under the liability method specified by Statement of Financial Accounting Standards No. 109, deferred taxes were determined based on the estimated future tax effect of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted laws. INCOME PER SHARE Primary income per common share was calculated by dividing net income by the weighted average common shares outstanding. The effect of common stock equivalents, including shares issuable upon the exercise of stock options (calculated using the treasury stock method) and upon the assumed conversion of the Company's 3.93-percent convertible notes and 6-percent convertible debentures, was not significant or was anti-dilutive for all periods presented. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. These investments are carried at cost which approximates market.
FOR THE THREE MONTHS ENDED MARCH 31, ----------------- (IN THOUSANDS) 1995 1994 ------ ------ Cash paid during the period for: Interest (net of amounts capitalized).................................... $7,411 $2,632 Income taxes (net of refunds)............................................ 109 (53)
7 8 PRO FORMA FINANCIAL INFORMATION On March 1, 1995, Apache completed the acquisition of 315 oil and gas fields from Texaco Production and Exploration Inc. (Texaco) for an adjusted purchase price of $564 million. The acquisition of the Texaco properties has been accounted for using the purchase method of accounting and has been included in the financial statements of the Company since the date of the acquisition. The following unaudited pro forma financial information shows the pro forma effect on the Company's consolidated results of operations as if the acquisition were effective on January 1 of the year indicated. The pro forma data presented is based on numerous assumptions and should not necessarily be viewed as being indicative of future operations.
(IN THOUSANDS, EXCEPT PER SHARE DATA) FOR THE THREE MONTHS FOR THE THREE MONTHS ENDED MARCH 31, 1995 ENDED MARCH 31, 1994 ------------------------- ------------------------- AS REPORTED PRO FORMA AS REPORTED PRO FORMA ----------- --------- ----------- --------- Revenues and other income..................... $ 158,652 $ 182,427 $ 121,591 $ 163,261 Net income.................................... $ 5,991 $ 4,211 $ 9,407 $ 7,799 Net income per common share................... $ .10 $ .07 $ .15 $ .13 Weighted average shares outstanding........... 61,445 61,445 61,164 61,164
ACQUISITION FINANCING On March 1, 1995, in connection with the acquisition of certain oil and gas properties from Texaco, lenders increased the size of Apache's revolving credit facility from $700 million to $1 billion, subject to borrowing base availability. The borrowing base is the estimated loan value of the Company's oil and gas reserves, not including reserves outside the United States and subject to certain other exclusions, based upon forecast oil and gas prices and rates of production, as periodically redetermined by the lenders. Upon closing the Texaco transaction on March 1, 1995, Apache had approximately $840 million in loans outstanding under the facility with approximately $60 million unborrowed and available. Under terms of the credit facility, as amended March 1, 1995, the Company must (i) maintain a minimum tangible net worth of $650 million, which is adjusted quarterly for subsequent earnings and securities transactions, and (ii) maintain a ratio (A) earnings before interest, taxes, depreciation, depletion and amortization to (B) consolidated interest expense, of not less than 3.7:1. Restrictive covenants under the facility include certain limitations on indebtedness and contingent obligations, as well as certain restrictions on liens and investments in international subsidiaries. The Company has complied with its financial ratios and covenant requirements at all times since the inception of the revolving credit facility in July 1991. The facility matures on March 1, 2000, and may be extended in one-year increments with the lenders' consent. PLANNED TRANSACTION On December 21, 1994, Apache entered into a merger agreement with DEKALB Energy Company (DEKALB), under which the shareholders of DEKALB will receive, in the aggregate, between 8.0 and 8.9 million shares of Apache common stock and DEKALB will become a wholly-owned subsidiary of Apache. The transaction will be accounted for using the pooling of interests method of accounting. Apache and DEKALB estimate that the cost required to complete the transaction will total between $8 and $10 million. 8 9 DEKALB's reported oil and gas reserves, located almost entirely in western Canada, were estimated to be approximately 364 billion cubic feet equivalent, and included approximately 300 billion cubic feet of natural gas and 11 million barrels of hydrocarbon liquids at December 31, 1994. DEKALB also has approximately 150,000 net undeveloped mineral acres, and has ownership interests in 12 gas processing plants, six of which it operates. Upon completion, the DEKALB merger will provide Apache with a substantial presence in North America's largest natural gas basin including properties with significant further development potential and the infrastructure, including skilled professionals, to conduct Canadian operations. The merger has been approved by the board of directors of Apache and DEKALB, and holders of a majority of DEKALB's voting stock have agreed to vote their shares to approve the merger. Consummation of the DEKALB merger is currently expected to be completed May 17, 1995. 9 10 ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL RESULTS For the first quarter of 1995, Apache reported net income of $6 million, or $.10 per share, on total revenues of $158.7 million compared to net income of $9.4 million, or $.15 per share, on total revenues of $121.6 million a year ago. The 36-percent decline in earnings reflected the impact of lower gas prices coupled with higher financing costs. Apache's financial performance for the first quarter of 1995 was impacted by the following items: Acquisitions: On March 1, 1995, Apache completed the acquisition of 315 oil and gas fields from Texaco Production and Exploration Inc. (Texaco) for an adjusted purchase price of $564 million. With the acquisition, Apache's total equivalent reserves increased 40 percent over year-end 1994. Oil reserves, as a percent of total reserves, increased from 37 percent to approximately 47 percent. Estimated production volumes from the Texaco properties during the month of March were 18,114 barrels of oil per day (bopd) and 73 million cubic feet per day (MMcfd), which on a quarterly basis added 6,420 bopd to reported oil volumes and 25 MMcfd to reported gas volumes. This acquisition accounted for 24 percent of the increase in total gas production over a year ago. Acquisitions completed in the second half of 1994 added approximately 53 MMcfd of gas and 3,700 bopd of oil to 1995 production. The Texaco transaction, and four smaller acquisitions in which Apache purchased additional interests in existing properties, added 111 million barrels of oil equivalent (MMboe) of reserves for the quarter. Oil and Gas Production and Pricing: The company posted record oil and gas production during the first quarter of 1995, boosting total revenues to $158.7 million. A $4 per barrel increase in Apache's average realized oil price in 1995 partially offset a 27-percent decline in realized gas prices. 10 11 RESULTS OF OPERATIONS Volume and price information concerning the Company's 1995 and 1994 first quarter oil and gas production is summarized in the following table:
FOR THE THREE MONTHS ENDED MARCH 31, --------------------- INCREASE SELECTED OIL AND GAS OPERATING STATISTICS 1995 1994 (DECREASE) --------------------------------------------------- -------- -------- ---------- Gas Volume -- Mcf per day: Domestic......................................... 486,028 382,764 27% Foreign.......................................... 6,125 4,139 48% -------- -------- Total.................................... 492,153 386,903 27% ======== ======== Average Gas Price -- Per Mcf....................... $ 1.53 $ 2.09 (27%) Oil Volume -- Barrels per day: Domestic......................................... 39,738 32,003 24% Foreign.......................................... 3,072 2,644 16% -------- -------- Total.................................... 42,810 34,647 24% ======== ======== Average Oil Price -- Per barrel.................... $ 16.85 $ 12.85 31% Natural Gas Liquids (NGL) -- Barrels per day....... 1,562 1,323 18% NGL Price -- Per barrel............................ $ 12.77 $ 11.03 16% Domestic Full Cost Amortization Rate............... 45.1% 43.1% 5%
Oil and gas production revenues for the first quarter of 1995 jumped eighteen percent to $134.4 million compared to $114.2 million last year. A 36-percent increase in equivalent production and 31-percent rise in realized oil prices mitigated the impact of lower gas prices from the comparable period of 1994. In 1995, gas sales declined $5.2 million, or seven percent, from last year to $67.7 million. A $.56 per Mcf drop in average realized gas prices from last year negatively impacted gas sales by $25 million, while increased production added $19.8 million to gas revenues. The Company reported natural gas production of 492.2 MMcfd in the first quarter of 1995, a 105.3 MMcfd increase from 1994 levels. Acquisitions, both in the second half of 1994 and the first quarter of 1995, accounted for 67 percent of the increase. First quarter oil production of 42.8 Mbopd rose 8.2 Mbopd, or 24 percent, over the same period in 1994. Oil sales rose by $24.9 million to $64.9 million for the first quarter 1995 from increased production, resulting principally from acquisitions, and from increased oil prices. In the first quarter of 1995, oil prices increased by $4 per barrel to a realized price of $16.85. The increase in oil volumes impacted 1995 oil sales by $9.4 million while the rise in oil prices impacted sales by $15.5 million. Revenues from the sale of natural gas liquids (NGL) for the first quarter of 1995 increased $.5 million from a year ago to $1.8 million. Higher production and increased prices drove the 37-percent increase in NGL sales. 11 12 Gathering, processing and marketing revenues of $22.9 million in the first quarter of 1995 tripled the revenues from a year ago. The activity reflects increased volumes of purchase and resale transactions by Apache's oil and gas marketing subsidiaries. These marketing transactions generally carry a low margin. Depreciation, depletion and amortization (DD&A) expense for the first quarter of 1995 rose $11.4 million, or 22 percent, to $62.7 million. DD&A expense for domestic oil and gas properties rose as a result of an increase in oil and gas sales and an increase in Apache's domestic amortization rate, expressed as a percentage of sales, from 43.1 percent in 1994 to 45.1 percent in 1995. Lower gas prices contributed to the increase in Apache's domestic rate for the first quarter of 1995. There were no international impairments in the first quarter of 1995. Reflecting the impact of acquisitions, operating costs for the first quarter of 1995 rose 27 percent from a year ago to $42.1 million. Operating costs include lifting costs, workover expense, production taxes and other taxes. Based on an equivalent unit of production, operating costs rose $.04 barrel of oil equivalent (boe), or one percent, in 1995 to $3.70 boe. The unit cost increase reflects the acquisition of the Texaco properties which are 69 percent oil on an energy equivalent basis. Oil properties typically have a higher expense than gas properties. The unit cost increase was partially offset by $.9 million of production tax refunds in 1995. First quarter administrative, selling and other costs increased $.5 million compared to a year ago, while declining $.15 on a boe basis. The decline in administrative costs per barrel of oil equivalent reflects continued cost controls and the increase in production. Administrative costs increased due to expenses to assimilate Texaco properties into Apache's operations. Net financing costs increased $8.1 million, or 129 percent, for the first quarter of 1995, to $14.3 million due to an increase in debt outstanding and higher interest rates since last year. Apache's effective interest rate increased from 5.24 percent in 1994 to 7.25 percent in 1995 primarily due to increases in market rates. Debt increased $550 million since December 31, 1994, primarily as a result of increased borrowings to fund acquisitions. CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES CAPITAL COMMITMENTS Apache's primary needs for cash are for exploration, development and acquisition of oil and gas properties, repayment of principal and interest on outstanding debt and payment of dividends. The Company generally funds its exploration and development activities through internally generated cash flows. Apache budgets its capital expenditures based upon projected cash flows and routinely adjusts its capital expenditures in response to changes in oil and gas prices and corresponding changes in cash flow. Expenditures for exploration and development increased to $71.4 million for the first quarter of 1995 from $68.7 million during the comparable period last year. Apache completed 22 producing wells out of 38 domestic wells drilled for the first quarter of 1995. By comparison, the Company completed 55 producing wells of 64 gross domestic wells during the first quarter of last year. Domestic expenditures declined slightly from 1994 while international exploration and development costs rose 85 percent to $9.8 million. Apache acquired $573.1 million of oil and gas properties during the first quarter of 1995, compared with $4.5 million a year ago. On March 1, 1995, the Company completed its acquisition of 315 oil and gas fields from Texaco for an adjusted purchase price of $564 million. Apache also divested $20.3 million of non-core oil and gas properties in the first quarter of 1995. Other capital expenditures during the first quarter of 1995 increased to $1.8 million from $1.5 million for the same period a year ago. 12 13 CAPITAL RESOURCES AND LIQUIDITY Apache's primary capital resources are net cash provided by operating activities, proceeds from financing activities and proceeds from the sale of non-strategic assets. Net cash provided by operating activities during the first quarter of 1995, rose to $72.9 million compared to $70.3 million for the same period last year. On January 4, 1995, Apache completed the issuance of $172.5 million principal amount of its 6-percent Convertible Subordinated debentures due 2002, which are convertible into Apache common stock at a conversion price of $30.68 per share. Net proceeds were used to reduce bank debt, provide funds for acquisitions and general corporate purposes. The 6-percent debentures have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. Costs associated with the issue of the 6-percent debentures totaled $4.1 million. On March 1, 1995, the Company's revolving credit facility was amended and restated, increasing it from $700 million to $1 billion. The facility matures on March 1, 2000, and may be extended in one-year increments with the lenders' consent. Based on the Company's ratio of debt to total capital, the interest rate margin over LIBOR at March 31, 1995, was 1.125 percent. The Company also pays a facility fee based on its ratio of debt to total capital. The facility fee at March 31, 1995, was .375 percent of the available portion of the commitment and .1875 percent of the unavailable portion of the commitment. As of March 31, 1995, the available portion of the commitment was $881 million, of which $836 million was outstanding. Costs associated with the amendment of the facility totaled $7.2 million. At March 31, 1995, Apache had a total of $1.2 billion in long-term debt outstanding, up $550 million from the end of 1994. The Company had $5.2 million in cash equivalents on hand at March 31, 1995, down $9.9 million from December 31, 1994. The Company's ratio of current assets to current liabilities at the end of first quarter of 1995 of 1:1 increased from .9:1 at year-end 1994. Management believes that cash on hand, net cash generated from operations and unused available borrowing capacity under the revolving credit facility will be adequate to meet future liquidity needs for the next two fiscal years, including satisfying the Company's financial obligations and funding exploration and development operations and routine acquisitions. FUTURE TRENDS The Company plans to implement several strategic initiatives designed to accelerate the integration of acquired properties, streamline operations and strengthen its balance sheet. To maximize profit margins and rationalize its enlarged asset base, Apache plans to sell non-core oil and gas properties in its Rocky Mountain region and close the Company's Denver office. Proceeds from the sale of the Rocky Mountain and other non-strategic properties in 1995 are expected to exceed $200 million. Funds received from property sales will be applied toward the reduction of debt. Capital and human resources from Apache's Rocky Mountain region will be redeployed within the Company. Apache has continually followed a practice of expanding and upgrading its reserves through a combination of exploratory and development drilling, acquisitions, reworkings and recompletions and upgrading its production base by disposing of lower-margin and non-strategic properties. 13 14 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The information set forth in Note 9 to the Consolidated Financial Statements contained in the registrant's 1994 annual report on Form 10-K, for the year ended December 31, 1994, filed March 7, 1995, is incorporated herein by reference. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION The Securities and Exchange Commission has declared effective Apache's Registration Statement on Form S-4 relating to the Company's previously announced merger agreement with DEKALB Energy Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits. 11.1 Computation of Earnings per Share. 27.1 Financial Data Table. b. Reports filed on Form 8-K. During the fiscal quarter ended March 31, 1995, Apache filed a Current Report on Form 8-K and Amendment No. 1 on Form 8-K/A, each dated March 1, 1995 for: Item 2. Acquisition or Disposition of Assets -- Registrant closed the purchase of the interest of Texaco Exploration and Production Inc. in approximately 315 oil and gas properties. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits -- Relating to the Texaco transaction, Apache filed (i) the Statement of Combined Revenues and Direct Operating Expenses for the Oil and Gas Properties of Texaco Exploration and Production Inc. Sold to Apache, for the years ended December 31, 1993 and 1994; (ii) the Unaudited Pro Forma Consolidated Condensed Statement of Operations of Apache Corporation and Subsidiaries, as of December 31, 1994; and (iii) the Unaudited Pro Forma Consolidated Condensed Balance Sheet of Apache Corporation and Subsidiaries, as of December 31, 1994. 14 15 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized. APACHE CORPORATION Dated: May 15, 1995 /s/ Mark A. Jackson --------------------------------------- Mark A. Jackson Vice President, Finance Dated: May 15, 1995 /s/ R. Kent Samuel --------------------------------------- R. Kent Samuel Controller and Chief Accounting Officer 16 INDEX TO EXHIBITS 11.1 Computation of Earnings per Share. 27.1 Financial Data Table.
EX-11.1 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11.1 APACHE CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED MARCH 31, 1995 MARCH 31, 1994 -------------------------- -------------------------- WEIGHTED AVERAGE CALCULATION: Net income..................................... $ 5,991 $ 9,407 ======== ======== Weight average shares outstanding.............. 61,445 61,164 ======== ======== Net income per share, based on weight average shares outstanding........................... $ .10 $ .15 ======== ======== PRIMARY CALCULATION: Net income..................................... $ 5,991 $ 9,407 Assumed conversion of 3.93-percent debentures................................... 549 539 -------- -------- Net income, as adjusted........................ $ 6,540 $ 9,946 ======== ======== COMMON STOCK EQUIVALENTS: Weighted average shares outstanding............ 61,445 61,164 Stock options Common stock equivalents....................... 87 662 Assumed conversion of 3.93-percent debentures................................... 2,778 2,778 -------- -------- $ 64,310 $ 64,604 ======== ======== Net income per common share primary............ $ .10 $ .15 ======== ========
The assumed conversion of the 6-percent convertible debentures due 2002 would be anti-dilutive for the first quarter of 1995. EX-27.1 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 5,166 0 107,896 0 12,418 135,582 3,797,861 (1,549,107) 2,422,206 134,597 1,207,852 78,242 0 0 740,226 2,422,206 134,372 158,652 102,645 126,317 0 0 14,962 9,002 3,011 5,991 0 0 0 5,991 .10 .10
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